Detailed Rationale

Crisil Ratings has revised its outlook on the long-term bank facilities of NIF Pvt Ltd (NIFPL; part of the RSPL group) to ‘Negative’ from ‘Stable’ while reaffirming the rating at ‘Crisil A-’ and has reaffirmed its ‘Crisil A2+’ rating on the short-term bank facility. 

 

The revision in outlook reflects the expected weakening in the business and financial risk profiles of NIFPL driven by decline in profitability due to increased milk procurement prices and higher-than-expected debt due to the ongoing capacity expansion.

 

Revenue growth is expected to remain at 3-5% in fiscal 2026, driven by volume growth across all segments. In the next two fiscals, revenue growth is expected at 9-11% driven by sustained growth in existing segments and incremental revenue from the greenfield dairy processing unit with capacity of 2 lakh litre per day in Bihar, scheduled to be commissioned by the end of fiscal 2026. The operating (earnings before interest, taxes, depreciation amortisation) margin of NIFPL declined to 1% in the first nine months of fiscal 2026 from 4.6% in fiscal 2025 due to significant increase in milk procurement prices. However, the operating margin may revert to 3.5-4.5% in the near to medium term owing to gradual softening of milk procurement prices, ability of the company to pass on the prices to consumers and the increasing share of value-added products in the product portfolio post commissioning of the new plant. However, improvement in profitability along with ramp-up of operations in the Bihar plant will remain monitorable.

 

Debt protection metrics moderated in the first nine months of fiscal 2026 with decline in operating profitability and increase in external debt to fund the ongoing capex. The debt is expected around Rs 226 crore as on March 31, 2026, up from Rs 143 crore a year earlier. The company has availed of additional loan of Rs 75 crore (Rs 55 crore disbursed till date) for setting up the greenfield dairy processing unit in Bihar, with the total capex estimated around Rs 108 crore. As a result, the total outside liabilities to tangible networth (TOLTNW) ratio and adjusted interest coverage may moderate — the TOLTNW ratio is projected at 1.3-1.5 times as on March 31, 2026, as against 1.1 times as on March 31, 2025, while the adjusted interest coverage is seen declining to 1.5-2.0 times for fiscal 2026 from 8.6 times for fiscal 2025. With expected improvement in profitability and increase in scale of operations, the adjusted interest coverage is expected above 6 times and the TOLTNW ratio at 1.3-1.5 times over the medium term. Any delay in improvement in the debt metrics will be a key rating sensitivity factor.

 

The ratings continue to reflect the established market position of NIFPL in Uttar Pradesh, backed by its brand, Namaste India, product diversity and strong procurement and distribution network. The ratings also factor in need-based and timely financial support from the promoters. These strengths are partially offset by modest operating margin and susceptibility to regulatory changes, epidemic-related risks and intense competition.

Analytical Approach

Crisil Ratings has considered the standalone business and financial risk profiles of NIFPL. Crisil Ratings has also factored in support received by NIFPL from the RSPL group due to the company’s strong financial linkages with the group.

 

Unsecured loan (Rs 340 crore as on  January 31, 2026) extended by the promoters has been treated as 75% equity and 25% debt and preference shares (Rs 57 crore as on December 31, 2025) have been treated as 100% equity as per the Crisil Ratings criteria.

Key Rating Drivers - Strengths

Established market position

NIFPL has been in the dairy business for more than a decade and has established a strong market position, especially in Kanpur, Uttar Pradesh. The company operates its dairy business under the Namaste India brand (which has a strong position in Kanpur) and plans to expand to other geographies. Products are sold through ~54 exclusive retail outlets across Kanpur and nearby regions and ~98 retail outlets all over India. Revenue rose at a compound annual growth rate of 9% over the five years through fiscal 2025 and is likely to increase 9-12% over the medium term driven by commissioning of the greenfield dairy unit in Bihar by the end of fiscal 2026, rising capacity utilisation, improvement in product mix and steady demand from existing markets. Profitability will improve, too.

 

Revenue growth over the medium term will be driven by improving capacity utilisation, expansion in new geography i.e., Bihar, improvement in product mix and steady demand from existing markets.

 

Adequate financial risk profile because of efficient working capital management and funding support from the RSPL group

NIFPL has been receiving strong funding support from its promoters and parent during exigencies. The promoters have been regularly extending funds to meet debt obligation as well as capex and working capital requirements. The working capital has been managed efficiently, as reflected in moderate utilisation of bank lines. Strong funding support from the promoters and parent is likely to continue.

 

The financial risk profile is supported by healthy networth of Rs 338 crore as on March 31, 2025. However, given the ongoing capex in Bihar and decline in operating margin, the financial risk profile will moderate in fiscal 2026 with networth seen at Rs 270-290 crore as on March 31, 2026. That said, moderate capex plans of Rs 25-30 crore over the medium term and expected improvement in profitability will help improve the financial risk profile, driven by higher capacity utilisation with ramp-up of operations. Adjusted interest coverage is expected above 6 times and the TOLTNW ratio at 1.3-1.5 times over the medium term from 1.5-2 times and 1.3-1.5 times during current fiscal (8.6 times and 1.1 times during previous fiscal). Also, debt obligation will not increase, as the new loan has moratorium of two years and repayment will begin from fiscal 2028. NIFPL has already applied for interest subvention and capital subsidy under eligible schemes which will benefit the financial risk profile.

Key Rating Drivers - Weaknesses

Susceptibility to adverse regulatory changes, epidemic-related risks and intense competition

The price of milk is sensitive to changes in government policies and environmental conditions and can directly impact the operating margin of dairy product manufacturers. NIFPL also remains vulnerable to shortage in milk production on account of external factors such as cattle diseases as witnessed in fiscal 2023.

 

The dairy industry is highly fragmented and the consequent competitive pressure may continue to constrain scalability, pricing power and profitability. Furthermore, as a majority of NIFPL’s revenue comes from Kanpur, risk related to geographical concentration will persist. Ability to expand presence in other regions amid competition will remain monitorable.

 

Modest operating profitability

Operating profitability was modest at 4.6% in fiscal 2025 and has been volatile over the past several years. Due to increase in milk procurement prices and delay in passing on the prices to consumers amid intense competition and external factors, NIFPL’s profitability declined to 1% in the first nine months of fiscal 2026. However, it is expected to improve to 3.5-4.5% over the medium term with passthrough of increase in prices to consumers and increased revenue contribution of high value-added products such as ice cream and ghee. The ongoing capex in Bihar will also lead to increase in scale of operations and higher profitability from fiscal 2027.

Liquidity Adequate

The liquidity is supported by unencumbered cash and equivalents of Rs 25 crore as on March 31, 2025. Net cash accrual is projected at Rs 5-10 crore for fiscal 2026 and Rs 60-80 crore each for the next two fiscals, against yearly debt obligation of Rs 12-20 crore over the medium term. The working capital limit was utilised 28% on average over the 12 months ended December 31, 2025. Need-based funding support from the RSPL group is expected to continue.

Outlook Negative

Crisil Ratings believes NIFPL’s credit risk profile may weaken with moderation in profitability, but will continue to benefit from the company’s established brand in Kanpur, healthy demand prospects for dairy products and need-based and timely financial support from the promoters.

Rating sensitivity factors

Upward factors

• Strengthening operating performance with sizeable revenue growth and operating profitability going above 5 – 5.5% while maintaining the financial risk profile
• Higher geographical and product diversification strengthening the business risk profile

 

Downward factors

• Sustained weakening of the operating performance with revenue degrowth, delay in ramp-up of operations at the Bihar plant and operating profitability remaining below 3-4%
• Sizeable stretch in the working capital cycle or additional large, debt-funded capex weakening the financial risk profile
• Change in the stance of the RSPL group regarding support to NIFPL

About the Company

NIFPL is a wholly owned subsidiary of Leayan Global Pvt Ltd (‘Crisil BBB/Stable/Crisil A2’) and a part of the RSPL group. Incorporated in 2007, NIFPL manufactures dairy products such as pouched milk, buttermilk, skimmed milk powder, pure ghee, dairy whitener, butter and instant food products under its Namaste India brand, mainly in Uttar Pradesh.

 

The company is promoted by the Kanpur-based Gyanchandani family, which also owns RSPL Limited (‘Crisil AA/Negative/Crisil A1+’; maker of Ghadi detergents). RSPL hived off its dairy business to NIFPL.

Key Financial Indicators*

Particulars	Unit	2025	2024
Operating Income	Rs crore	1779	1696
Profit after tax (PAT)	Rs crore	16	3
PAT margin	%	0.9	0.2
Adjusted debt/Adjusted networth	Times	0.68	0.77
Adjusted interest coverage	Times	8.60	6.35

*Crisil Ratings adjusted numbers

Any other information: Not applicable